The UK’s antitrust watchdog has said that streaming music antitrust action is unlikely, despite the fact that the business is dominated by a small number of major players. Apple Music is said to be the third most popular service.
The Competition and Markets Authority (CMA) said that none of the companies involved were making excessive profits (an understatement if ever there were one!), and that consumers are not being harmed by the limited choice of services …
The CMA report says that streaming music services means that consumers get access to more music for less money.
Whereas previously consumers would typically own a few CDs or vinyl records by their favourite artists, the rise of music streaming has given consumers easy access to large catalogues of music covering a vast array of genres and time periods for a fixed monthly price (or free, but with ads).
Recorded music is now also costing consumers less overall compared to when CDs and other physical formats were more popular, with inflation-adjusted UK recorded music revenues falling by around 40% from £1.9 billion in 2001 to £1.1 billion in 2021 […]
Today, more than 80% of music is listened to via music streaming services.
The report addresses one complaint by artists: that they get paid far too little for music streams. The CMA did find that earnings were very low. In one example, it showed that a million streams per month would only earn an artist around £12,000 ($14,400) per year.
However, it said that this was primarily a function of the vast choice available to consumers, meaning that smaller artists inevitably see a small share of revenue. The CMA found that both royalty rates and income were slowly rising, and that the average royalty rate is 26%.
More creators than ever before are releasing music – with the number of artists who stream their music increasing from around 200,000 in 2014 to 400,000 in 2020 […]
There has been a huge increase in the number of artists sharing their music and a vast back catalogue made available via streaming. This, coupled with the fact that there is only a finite amount of music a consumer can listen to and a relatively fixed pot of revenue from streaming, inevitably reduces the amount that most artists can earn, even with increased royalty rates.
The report says that Spotify has 50-60% of the streaming music market, with Amazon in second place at 20-30%, followed by Apple Music at 10-20%. While the CMA says the numbers are based on official charts date, the huge ranges cited clearly indicate that the market shares are extremely rough estimates.
The report concludes that consumers are paying a fair price, but does note that switching services can be difficult due to the loss of playlists and other personalized data. It says this isn’t a big problem today, but it does expect streaming music companies to address this in the future.
There are some nascent music data portability services that support switching, but demand for them is currently low. Whilst this is to be expected in a growing market and is not necessarily a dynamic that causes immediate concern, as the market reaches maturity it would be concerning if we did not see more vigorous competition between streaming services and enhanced efforts to make it seamless for consumers to switch and port their playlists or musical preferences.
Streaming music is a business in which it is extremely difficult to make money. Spotify has been operating at a loss for most of its lifetime, and Beats cofounder Jimmy Iovine has said there is no money to be made.
“The streaming services have a bad situation, there’s no margins, they’re not making any money,” he said. “Amazon sells Prime; Apple sells telephones and iPads; Spotify, they’re going to have to figure out a way to get that audience to buy something else.”
Apple does still face streaming music antitrust troubles, however: an EU investigation into a complaint by Spotify did find that the iPhone maker gave its own music platform an unfair advantage.
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